DEAR BOB: I am doing a tax-deferred exchange of two properties I own in South Dakota. One property has a $40,000 mortgage. The other is free and clear. The replacement property is in Florida. I recall reading in your articles that to defer my profit tax I must trade equal or up in both value and mortgage debt. If I do not have a mortgage on the Florida replacement property, will I be creating a taxable situation? – Larry J. DEAR LARRY: First, all the properties in your Internal Revenue Code 1031 tax-deferred exchange must be held for investment or for use in a trade or business. I hope none of these properties is or will be your personal residence (which is not eligible for a tax-deferred exchange). Purchase Bob Bruss reports online. Second, if you owe $40,000 less after the excha...
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